RULE THE MARKET - Karvy Onlinecontent.karvyonline.com/contents/kstreetissue038.pdfviews presented in this report are prepared by Karvy Stock Broking Limited and are subject to change

ISSUE: 038

25TH MAY, 2019

RULE THE MARKET

From The Desk Of Research Head

Disclaimer: Karvy Stock Broking Limited [KSBL] is registered as a research analyst with SEBI (Registration No INZ000172733). KSBL is also a SEBI registered Stock Broker, Depository Participant, Portfolio Manager and also distributes financial products. The subsidiaries and group companies including associates of KSBL provide services as Registrars and Share Transfer Agents, Commodity Broker, Currency and forex broker, merchant banker and underwriter, Investment Advisory services, insurance repository services, financial consultancy and advisory services, realty services, data management, data analytics, market research, solar power, film distribution and production, profiling and related services. Therefore associates of KSBL are likely to have business relations with most of the companies whose securities are traded on the exchange platform. The information and views presented in this report are prepared by Karvy Stock Broking Limited and are subject to change without any notice. 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Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither KSBL nor any associate companies of KSBL accepts any liability arising from the use of information and views mentioned in this report. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Past performance is not necessarily a guide to future performance. Forward-looking statements are not predictions and may be subject to change without notice. Actual results may differ materially from those set forth in projections. 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It is confirmed that KSBL and Research Analysts, primarily responsible for this report and whose name(s) is/ are mentioned therein of this report have not received any compensation from the subject company mentioned in the report in the preceding twelve months. It is confirmed that Research Analyst did not serve as an officer, director or employee of the companies mentioned in the report. KSBL may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Neither the Research Analysts nor KSBL have been engaged in market making activity for the companies mentioned in the report. We submit that no material disciplinary action has been taken on KSBL by any Regulatory Authority impacting Equity Research Analyst activities.

The market shifts its focus to Fundamentals after the Election Mandate

Elections have dominated much of the market directions for quite a while now. With the Lok Sabha

results and the elections out of the way, the euphoria created by it is slowly fading away as the focus

shifts back on fundamentals. There has been an increase in the foreign and domestic investments

because their faith and confidence has been restored in the market as a stable government once

again takes charge.

However, there are certain immediate worries for the market participants to look out for. The current

liquidity crunch in the economy as an impact of the NBFC crisis last year, the outflows of the FIIs,

slowdown in the volume growth of the consumption sector, softness in the auto sales and the FMCG

sectors & their recent results, the lagging credit growth and the GDP growth slowing down has

everyone worried. A slowdown in government spending in the last three quarters is also one of the

reasons for the economic slowdown in general which is affecting the GDP figures of the country.

We believe a correction for the inventory build-up is under process to try and solve the extent of the

unexpected slowdown in the consumer demand. RBI has made efforts to ease the liquidity position

in the country with tools such as the OMOs and two USD-INR swaps; more action is needed to make

it better. However, we believe the economy should recover in Q2FY2019-20 with the increase in the

capex which will drive the corporate earnings growth.

The Indian equities have underperformed in the first two months due to lack of enthusiasm amongst

institutional investors and outflows of FIIs. However, it has outperformed by almost 8% since then and

the recent trend indicates an upward movement.

With the trade war and the crude oil prices on the rise, the global economy remains a fragile

environment. The flattening of the US yield curve followed by an inversion acts as a warning for tough

days to come ahead. The weak Chinese economy and their structural problems are one of the major

reasons for uncertainty at the global front. All the same, China has launched some major monetary

and fiscal policies as an effort to stabilize the country’s growth. There is an impact of these measures,

albeit they are small.

India has done a good job in making significant progress in achieving macro stability since the last

crisis of the taper tantrum. The CPI has reduced by almost 9% since 2013 and so has the fiscal deficit.

The reforms carried out by the government such as the implementation of the Goods and Service

Tax (GST), the Insolvency and Bankruptcy Code (IBC), establishment of the Real Estate Regulatory

Authority (RERA) in states, formation of the Monetary Policy Committee (MPC) and the inflation

targeting regime deserve a notable mention.

Lastly, the NPA and stressed assets problem is being tackled through the IBC and the banking sector

is in a position to support growth once again with the recapitalization of state-owned banks. As a

result of the above reforms, the growth of the corporate sector earnings has been sub-par. However,

these results will help in the long term growth to improve the Indian economy. Despite the current

slowdown, the future prospects of growth in India look optimistic.

CONTENTSEquity 1-6

Derivatives 7-8

Commodity 9-12

Currency 13-16

TeamDr. Ravi Singh

Arun Kumar Mantri

Osho Krishan

Aditya Kistampally

Srinivas Krishnan Bobba

M V Narasinga Rao

Deepak Balkrushna Sakure

Konpal Pali

Jayasree Ram

Mahesh Bendre

Sourabh Gilda

Vivek Ranjan Misra

Veeresh Hiremath

Siddhesh Ghare

Ramesh Chenchala

Ravi Pandey

Ravikanth P

Kushal Asthana

Arpit Chandna

Vinod J

Amit Kumar

Karvy Head Office

Karvy Stock Broking Limited, Plot No.31/P, Karvy Millennium Towers, Nanakramguda, Financial District, Gachibowli, Hyderabad, Telangana-500032, India.

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Analyst CertificationThe following Karvy Research Desk, who is (are) primarily responsible for this report and whose name(s) is/ are mentioned therein, certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report. - DR. RAVI SINGH

Head-Technical & Derivatives Research

EQUITY

Economy

• Narendra Modi created history by becoming the first Indian Prime Minister afterJawaharlal Nehru to retain a majority after serving a full five-year term.

• The Employees’ Provident Fund Organisation (EPFO) is wary of its investmentsin private sector bonds and may choose not to invest in such instruments for thetime being.

• The Asian Development Bank has signed a $750 Mn loan pact with Indian RailwayFinance Corp Ltd. to fund the railways track electrification project.

• Moody’s Investors Service has said it expects India’s broad push towards fiscalconsolidation to continue even though the government’s fiscal policies are yetto be finalised.

Pharma

• Cipla Ltd., Alkem Laboratories Ltd. and Ajanta Pharmaceuticals Ltd. have receivedthe US Food and Drug Administration’s approval to market solifenacin succinatetablets, a generic version of Astellas Pharma US Inc’s Vesicare.

• Cadila Healthcare Ltd. received the US Food and Drug Administration’s finalapproval for esomeprazole magnesium delayed-release capsules, a genericversion of AstraZeneca Pharmaceuticals LP’s Nexium drug.

Automobiles

• Maruti Suzuki India Ltd. added over 200 workshops in 2018-19 (Apr-Mar) taking its total service network strength to 3,634 workshops across 1,789 towns and cities.

• Eicher Motors said the supplier of the components which are used in some Royal Enfield motorcycle models has vehemently denied the plaintiff’s claim. The company further said it sources components and parts from multiple vendors and therefore, this news is unlikely to have any material impact.

Banking

• Dewan Housing Finance Ltd. has informed its customers that it will not accept new deposits while it also put a hold on premature withdrawals.

• Some large public sector banks are likely to raise capital through the issuance of additional tier-I bonds in the current financial year started April.

Aviation

• India’s passenger traffic declined 4.5% on year to 11 Mn in April as Jet Airways shut its operations in the middle of the month.

Financial Services

• Reliance Capital signed a pact with Japan-based Nippon Life Insurance to sell its entire stake in the asset management joint venture to Nippon Life and other financial investors, for Rs. 60 Bn or $860 Mn.

• Max Financial Services promoter group Max Ventures Investment Holdings created pledge of 60,000 shares on May 20.

NEWS

INTERNATIONAL NEWS

• US Manufacturing PMI in May dropped to 50.6 from 52.6 in April while the CompositePMI fell to 50.9 from 53.

• The weekly data published by the US Department of Labor (DOL) shows that 211,000 citizens applied for unemployment benefits in the week ending May 18 in the US.

• UK PM Theresa May resigns acknowledging failure to deliver Brexit. UK set for newPM by end of July.

TRENDSHEETSymbol CMP S2 S1 R1 R2 TREND

SENSEX 39434.72 37822 38628 40183 40931 Up

NIFTY 11844.10 11376 11610 12060 12275 Up

NIFTYBANK 31212.55 29416 30314 31908 32603 Up

RELIANCE 1336.85 1256 1296 1385 1433 Up

SBIN 355.35 317 336 369 383 Up

INDUSINDBK 1648.90 1287 1468 1744 1839 Up

ICICIBANK 431.75 385 408 444 457 Up

HDFC 2123.40 1941 2032 2212 2301 Up

IBULHSGFIN 794.10 688 741 847 900 Up

HDFCBANK 2373.35 2250 2312 2442 2511 Up

YESBANK 141.20 127 134 150 158 Down

AXISBANK 793.20 742 768 812 830 Up

LT 1544.15 1340 1442 1604 1665 Up

FORTHCOMING RESULTSCOMPANY NAME DATE

ADANIGAS 27-May-19

ADANIPORTS 27-May-19

BHEL 27-May-19

CENTURYPLY 27-May-19

COLPAL 27-May-19

FORCEMOT 27-May-19

INDIGO 27-May-19

NHPC 27-May-19

OIL 27-May-19

ZEEL 27-May-19

PNB 28-May-19

SPICEJET 28-May-19

ADANIENT 29-May-19

ADANIPOWER 29-May-19

BEL 29-May-19

KSTREET - 25TH MAY 2019 1

INDIAN INDICES (% CHANGE)

GLOBAL INDICES (% CHANGE)

NIFTY MIDCAP100TOP GAINERS & LOSERS (1W)

SECTORAL INDICES (% CHANGE)

FII/FPI & DII TRADING (IN RS. CRORES)

NSE NIFTY TOP GAINERS & LOSERS (1W)

EQUITY

Source: Bloomberg

0.033

0.034

0.035

0.036

0.037

0.038

0.039

0.040

NIFTY INDEX

SENSEX INDEX

SPBSMIP INDEX

SPBSSIP INDEX

NIFTYJR INDEX

NSEMCAP INDEX

-0.03

-0.02

-0.01

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

NSE

AU

TO IN

DEX

NSE

BAN

K IN

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NSE

SRV

IND

EX

NSE

PHRM

IN

DEX

NSE

IT IN

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MET

IND

EX

NSE

NRG

IN

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NSE

CO

N IN

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NSE

REA

L IN

DEX

NSE

FMC

G IN

DEX

-0.03

-0.02

-0.02

-0.01

-0.01

0.00

0.01

0.01

0.02

Nas

daq

Dow

Jon

es

S&P

500

Nik

kei

Han

g Sa

ng

Sang

hai C

omp

FTSE

100

CA

C 4

0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

BAN

K O

F IN

DIA

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INA

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SERV

ICES

GRA

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ON

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CEN

TRA

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HEX

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TEC

HN

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BALK

RISH

NA

IN

DU

STRI

ES

LTD

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

GRA

SIM

IS

IHFL

IS

HPC

L IS

ICIC

IBC

IS

SBIN

IS

TEC

HM

IS

ITC

IS

DRR

D IS

TCS

IS

INFO

IS

-1500

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0

500

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17-05-2019 20-05-19 21-05-19 22-05-19 23-05-19

FII DII


BEAT THE STREET - FUNDAMENTAL ANALYSIS

Phoenix Mills Ltd CMP Rs.613Target Price Rs.735Upside 21%

Investment Rationale

• PML has been consistently able to maintain occupancy level for all its stabilized malls at more than 90% compared to industry standards of 85% (Source: JLL). With higher occupancy level, PML has achieved rental CAGR of 12% over FY14-19. MarketCity Malls at Pune and Bengaluru have achieved a higher rental CAGR of 16% over the same period. The growth in rentals can also be attributed to PML’s superior mall management skills of churning, relocating and resizing of retailers on a continuous basis.

• PML has ~6msf of retail portfolio spread across 8 malls in 6 cities. It has partnered with Canada Pension Plan Investment Board (CPPIB) and has acquired 2 land parcels – one each in Pune and Bengaluru – and an under construction retail asset at Indore. Outside the alliance, PML has acquired an under construction retail asset at Lucknow and has entered into JV with Bsafal Group to develop a mall in Ahmedabad. With these acquisitions, the company will double its retail portfolio in next 3-4 years.

• PML is utilizing its free cash flows for the expansion of the commercial segment at its existing assets to boost its retail portfolio and simultaneously grow its annuity portfolio.

• As of FY19, PML has net D/E ratio of 1.2 which is expected to come down to 1 by FY21. We also derive comfort from the fact that all retail assets of PML have higher interest coverage ratios.

VALUE PARAMETERSFace Value (Rs.) 2.0

52 Week High/Low (Rs.) 732/489

M.Cap (Rs. Bn/US $mn) 94.9/1360.8

EPS (Rs.) 27.48

P/E Ratio (times) (FY20E) 22.39

Dividend Yield (%) 0.49

Stock Exchange NSE

P/E CHARTValuation

PML’s PAT grew at 30% CAGR over FY15-19. Over FY18-20E, PAT is expected to grow by 18% CAGR driven by 1) Revenue growth with 3 year CAGR of 11% 2) Renewals - Major area in HSP Mumbai (44%) and MarketCity Pune (36%) is coming up for renewal in next 2 years 3) Improved realizations at MarketCity Mumbai.

We have valued PML using the NAV method wherein we have calculated the value of ongoing projects and unsold inventories from completed projects. We have assumed a cap rate of 8% for rental assets and discount rate of 13% for residential projects. We estimate a target price of Rs. 735/share (post tax) on FY21 basis.

EQUITY

% OF SHARE HOLDING

in Rs.Mn ACTUAL ESTIMATE

YE Mar FY 19 FY 20 FY 21

REVENUE 17816 20680 21988

EBITDA 8615 10207 10853

EBITDA(%) 48.4% 49.4% 49.4%

PAT 2787 3421 3872

EPS (Rs.) 18.2 22.3 25.3

RoE (%) 8.2% 9.2% 9.6%

PE (x) 33.7 27.4 24.2

63%

28%

3% 6%

Promoter

FIIs

DIIs

Others 99.5

99.6

99.7

99.8

99.9

100

100.1

100.2

May

-18

Jun-

18

Jul-

18

Aug

-18

Sep-

18

Oct

-18

Nov

-18

Dec

-18

Jan-

19

Feb-

19

Mar

-19

Apr

-19

May

-19

PML Sensex

37%

1%6%

56%

Promoter

FIIs

DIIs

Others 50

60

70

80

90

100

110

120

Nov

-18

Dec

-18

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-18

Jan-

19

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19

Feb-

19

Feb-

19

Mar

-19

Mar

-19

Apr

-19

Apr

-19

Apr

-19

May

-19

Subros Sensex


• PML has been consistently able to maintainoccupancy level for all its stabilized malls atmore than 90% compared to industrystandards of 85% (Source: JLL). With higheroccupancy level, PML has achieved rentalCAGR of 12% over FY14-19. MarketCity Malls at Pune and Bengaluru have achieved a higher rental CAGR of 16% over the sameperiod. The growth in rentals can also beattributed to PML’s superior mall managementskills of churning, relocating and resizing ofretailers on a continuous basis.

• PML has ~6msf of retail portfolio spreadacross 8 malls in 6 cities. It has partnered with Canada Pension Plan Investment Board(CPPIB) and has acquired 2 land parcels

63%

28%

3%6%

Promoter

FIIs

DIIs

Others 99.5

99.6

99.7

99.8

99.9

100

100.1

100.2

May

-18

Jun-

18

Jul-

18

Aug

-18

Sep-

18

Oct

-18

Nov

-18

Dec

-18

Jan-

19

Feb-

19

Mar

-19

Apr

-19

May

-19

PML Sensex

37%

1%6%

56%

Promoter

FIIs

DIIs

Others 50

60

70

80

90

100

110

120

Nov

-18

Dec

-18

Dec

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Jan-

19

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Mar

-19

Mar

-19

Apr

-19

Apr

-19

Apr

-19

May

-19

Subros Sensex





BEAT THE STREET - FUNDAMENTAL ANALYSIS

SubrosCMP Rs.271Target Price Rs.336Upside 24%

VALUE PARAMETERSFace Value (Rs.) 2.0

52 Week High/Low (Rs.) 379/206

M.Cap (Rs. Bn/US $mn) 17678/252

EPS (Rs.) 190.1

P/E Ratio (times) (FY20E) 16

Dividend Yield (%) 3.7

Stock Exchange BSE

EQUITY

P/E CHART

% OF SHARE HOLDING

in Rs.Mn ACTUAL ESTIMATE

YE Mar FY 18 FY 19 FY 20 FY 21

Revenue 19129 21245 23683 26794

EBITDA 2100 2281 2614 3091

EBITDA(%) 11.0 10.7 11.0 11.5

PAT 624 795 1100 1461

EPS (Rs.) 10.4 12.2 16.9 22.4

RoE (%) 16.6 14.7 15.1 17.4

P/E 24.3 20.8 16.0 12.1

Investment Rationale• Car AC Business market share expansion: During FY19, Subros increased

its market share in Indian Car AC market from 40% to 42% (up by 200bps). During the year, the company started supplying Car AC products to Marazzo (M&M’s new launch). Subros has also increased its supply to Suzuki Gujarat plant due to its two shift production schedule and also started delivering orders for new Ertiga. The Company continues to garner ~74%+ of Maruti’s volume and remains a major supplier. In addition, Subros has also started to supply Car AC Products to Suzuki Motor Indonesia through Maruti Suzuki.

• Non Car AC - Non Maruti segment growing rapidly: In Non Car AC segment, Subros supplies ECM to Maruti and AC products to Buses, Trucks, Railway Cabins and Reefer Vans. The company anticipates its radiators business to Maruti has a potential to cross Rs.3 Bn sales vs. Rs. 2.4 Bn sales in FY19. Subros has also increased its supply of Truck cabin AC system/ ventilation system (blower) in all new trucks above 3.5 tonne category in India and has achieved ~65% market share. It has further expanded its product portfolio with commencement of the supply of Home AC components to Whirlpool and others. We believe these new segments are likely to add higher incremental sales to Subros existing revenue base over the medium to long term.

• Acquisition of Zamil Air Conditioners: During Q4FY19, Subros acquired the plant and machinery of Zamil Air Conditioners for Rs.115 Mn. This acquisition is likely to offer Subros access to Home AC segment (Indoor, Outdoor and Window Unit). The management expects this business to add incremental Rs. 2-3 Bn of sales over the next 3 years.

Valuation

At CMP of Rs. 271, Subros is quoting at PER of 12.1xFY21E earnings. We rate BUY on the stock for a target price of Rs. 336 (PER of 15xFY21E Earnings).

63%

28%

3%6%

Promoter

FIIs

DIIs

Others 99.5

99.6

99.7

99.8

99.9

100

100.1

100.2

May

-18

Jun-

18

Jul-

18

Aug

-18

Sep-

18

Oct

-18

Nov

-18

Dec

-18

Jan-

19

Feb-

19

Mar

-19

Apr

-19

May

-19

PML Sensex

37%

1% 6%

56%

Promoter

FIIs

DIIs

Others 50

60

70

80

90

100

110

120

Nov

-18

Dec

-18

Dec

-18

Jan-

19

Jan-

19

Feb-

19

Feb-

19

Mar

-19

Mar

-19

Apr

-19

Apr

-19

Apr

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May

-19

Subros Sensex




63%

28%

3%6%

Promoter

FIIs

DIIs

Others 99.5

99.6

99.7

99.8

99.9

100

100.1

100.2

May

-18

Jun-

18

Jul-

18

Aug

-18

Sep-

18

Oct

-18

Nov

-18

Dec

-18

Jan-

19

Feb-

19

Mar

-19

Apr

-19

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-19

PML Sensex

37%

1%6%

56%

Promoter

FIIs

DIIs

Others 50

60

70

80

90

100

110

120

Nov

-18

Dec

-18

Dec

-18

Jan-

19

Jan-

19

Feb-

19

Feb-

19

Mar

-19

Mar

-19

Apr

-19

Apr

-19

Apr

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May

-19

Subros Sensex





EQUITY

BEAT THE STREET - TECHNICAL ANALYSIS

Larsen & Toubro Limited

LT is trading with a secular uptrend and is currently trading with a strong bullish bias as seen on daily charts with decent volumes. During the current uptrend, the stock has also witnessed a decent breakout at 1465 levels with decent volumes indicating buying interest in the stock. The historical price action in the stock suggests that any meaningful dip in the stock may attract market participants which will help the stock to resume its up move. The stock has given the breakout of cluster of moving averages on daily charts. The breakout in the stock has seen significant volume formation on daily charts which enhances our bullish view in the stock. The stock is trading near its all time high and reflecting up move in the stock will remain intact in near term. On technical setup, the 14 period RSI is pointing northwards on daily and weekly charts after giving positive cross over with signal line. The parabolic SAR is maintaining its buy signal on daily charts. Considering all the above data, we recommend traders to enter the stock at the 1530 levels for the higher targets of 1860 followed by 1875 levels and any correction towards 1425 levels can be utilized to average the stock keeping a stop loss below 1320 levels on closing basis.

Escorts Limited

Escorts Limited, one of India’s leading engineering companies, manufactures best-in-class equipment for agriculture, infrastructure and railways for national and international markets. The company is operating in more than 40 countries. More than 1.5 million tractors and 65,000+ construction equipments across the world reflects their commitment towards the value. The company is associated with many prominent international companies like Minneapolis Moline Yamaha, Carraro, Ford, etc. Technically, the stock has bounced from the support level of 541 and moving upside. Previously, stock was in an uptrend making higher highs and higher lows on the weekly charts. Stock has seen some profit booking after making all time high of 1017 and taken the support around 541 levels. The stock has respected the support level several times and resumes its upside from the current levels. The stock is trading above the medium and long term moving averages i.e. 200/500 DEMA on the weekly chart. On the oscillator front, 14 periods Stochastic is placed above the signal line at 31.83 which is indicating strength in the counter. A positive crossover has been seen in 14 period RSI which is currently trading above the signal line around 46.85 re-affirming that positive momentum will remain intact. At the current levels, stock is giving an excellent opportunity for medium to long term investors to accumulate the stock around 600-610 levels for the potential upside target of 730-750 levels over the next 5-6 months keeping a stop loss below 540 levels.

STOCK LT

CMP 1544.15

ACTION BUY

ENTRY 1520-1530

AVERAGE 1425

STOP LOSS 1320

TARGET 1 1860

TARGET 2 1875

TIME FRAME 4-6 MONTHS

STOCK ESCORTS

CMP 634.90

ACTION BUY

ENTRY 600-610

AVERAGE 575

STOP LOSS 540

TARGET 1 730

TARGET 2 750

TIME FRAME 5-6 MONTHS


EQUITY

Sentiment

Initiation 655

Stop Loss 697

Target 598

Lot Size 700

Margin 90599

21-DEMA 643

Open Interest Shares 1484000

Change in OI 127400

Cost of Carry (%) 23.81

SECTORAL SNIPPETS

NIFTY REALTY (280.10) has ended the week on a positive note of 10.73% while Nifty 50 closed with a gain of 3.84% outperforming the benchmark index. The breadth of the REALTY index was also positive as 10 out of 10 stocks in the index ended on a positive note. The stocks which gained last week were IBREALEST, SOBHA, DLF, SUNTECK, BRIGADE, MAHLIFE, OBEROIRLTY, GODREJPROP, PRESTIGE and PHOENIXLTD which gained around 23.21%, 18.29%, 16.14%, 11.05%, 9.67%, 9.25%, 5.69%, 5.61%, 4.68% and 2.14% respectively. Technically, the said index is trading above its weekly and daily 20 period Simple moving average (SMA) indicating a bullish bias. The daily and weekly 14-period RSI is trading above its 9 periods EMA indicating bullish bias in the near term. Going ahead for the coming week, the index has support at 272 levels and below it at 264 levels while resistance is pegged at 286 levels and above it at 295 levels.

NIFTY BANK (31,212.55) outperformed the Nifty with a gain of 5.98% during the week passed by while the broader index Nifty gained by 3.83%. During the last week, the index witnessed a huge gap up and witnessed a stellar rally in view of the exit polls and election results. The index has closed at all-time highs after a clear victory was given by the voters to the NDA. During the week, Bank Nifty witnessed an upward biased consolidated movement in the range of 30100 and 31700 levels. It may continue to trade with a bullish bias until and unless 30100 levels are taken off from upside. On the earnings front, IndusInd Bank has reported net profit at Rs. 360.1 crore down 62% YoY. The Net Interest Income (NII) of the company surged 11% to Rs. 2,232.4 crore. Operating profit increased to Rs. 2,067.69 crore from Rs. 1,769.39 crore in Q4FY18. Gross Non-performing Assets (NPA) stood at 2.1% against 1.13% in December quarter while Net NPA came at 1.21% against 0.59% last quarter. Provisions stood at Rs. 1,561 crore against Rs. 606.7 crore in Q3. On the stock front, BANKBARODA, INDUSINDBK, SBIN, ICICIBANK gained by 22.41%, 19.56%, 11.42% and 10.98% respectively during the week. There’s no stock which closed in red during the week. Bank Nifty may face resistance at 31700 levels followed by 32000 levels. For the week ahead, support for the index can be pegged at 30300 levels followed by 30100 levels.

NIFTY FMCG (29,965.40) ended the week with a positive return of around 0.24% underperforming the benchmark index NIFTY which ended in green around 3.84%. The breadth of the FMCG index was positive as 11 out of 15 stocks in the index ended on a positive note while 4 stocks ended on a negative note. The stocks like GODREJIND, DABUR, UBL, PGHH, JUBLFOOD, MCDOWELL-N, BRITANNIA, COLPAL, HINDUNILVR, MARICO and GSKCONS closed the week in green and generated positive return of around 9.10%, 8.09%, 4.30%, 3.99%, 3.26%, 3.10%, 2.65%, 1.69%, 1.28%, 0.79% and 0.20% respectively while EMAMILTD,ITC, GODREJCP and TATAGLOBAL lost -2.39%, -1.47%, -1.30% and -0.21% respectively. The index is trading in the range of 28900-31050 levels from last 6 months. Technically, NIFTY FMCG index is placed above all its major moving averages on the daily chart which indicates inherent strength in the index. On the Momentum oscillator front, the 14-day RSI line crossed the 9-day signal line on daily chart and pointing northwards reflecting the index may trade with positive bias in the coming trading sessions. Going ahead, the index is expected to trade with positive bias. The support for the NIFTY FMCG index is pegged around 29500-29600 zone followed by 28900 levels. While on the higher side, the index may face resistance around 30800-30900 zone followed by 31200 levels.

NIFTY IT (15,569.85) has closed in red by around 1.70% underperforming the benchmark index Nifty which gained around 3.84% on weekly basis. Technically, the index is holding below its 21/50/100 day EMA levels on daily chart. Other indicators parabolic SAR suggest negative trend in the index. On daily charts, the index has tested the lower band in Bollinger bands and the bands are expanding. The index is sustaining below a breakaway gap on daily chart. Stock has given breakdown from a rising trendline support on daily chart. 14 day RSI is trading at 38.88 with a negative crossover. Among the index stocks HCLTECH & INFIBEAM closed in green while INFY, MINDTREE, TECHM, OFSS, TATAELXSI, WIPRO & TCS closed in red. Going forward, the supports for the index are placed around 15218 levels and below it at 15100 zone, any breach below the level could aggravate selling pressure in the counter while resistance is placed around 15850 levels and above that around 16010 levels suggesting possibility of huge supply at these levels.

PIDILITE INDUSTRIES: BUY PIDILITIND (JUN FUTURE) | CMP: 1238.30 SECTOR: CD

PIDILITIND in the week passed by closed with a gain of 5.88% whereas benchmark index NIFTY COMMODITIES gained around 5.11% during the same period marginally outperforming the said index. The stock has been in secular uptrend forming higher highs and higher lows and after clocking a life time high of 1324.90 levels, the stock went into correction mode in line with the broader market and in this correction found support around weekly 50 EMA and reversed its cyclical correction and resumed its primary trend. The momentum indicators like 14 periods RSI on the daily and weekly charts is trading above its 9 period EMA indicating a bullish bias. On the derivative front, the stock has seen short closure in the week passed by. Hence, we recommend Smart Traders to initiate long position near 1220 levels for the higher target of 1280 levels keeping a stop loss below 1189 levels.

Sentiment

Initiation 1220

Stop Loss 1189

Target 1280

Lot Size 500

Margin 79358

21-DEMA 1199

Open Interest Shares 2694000

Change in OI -291500

Cost of Carry (%) -11.79

AMARA RAJA BATTERIES: SELL AMARAJABAT (JUN FUTURE) | CMP: 644.25 SECTOR: AUTO&COMP

AMARAJABAT is our preferred pick in Auto-Ancillary space. The stock closed the week in red with a loss of -1.25% underperforming benchmark index NIFTY AUTO which closed the week with a gain of 4.63%. The stock is trading southward on the weekly charts from past few weeks with increasing number of trading volumes. The stock has not shown any recovery in the last couple of sessions where the NIFTY AUTO has witnessed buying interest indicating the underlying weakness in the counter. At current juncture, the stock is trading well below the major moving averages i.e. 21/55/100/200 on the daily as well as weekly charts indicating negative momentum to remain intact in the coming sessions. We expect the ongoing weakness in the stock is likely to continue and rise in the price may be used to create short positions for the short term trading perspective. The counter has immediate support around 590 levels followed by 570 levels while resistance is pegged around 700 levels followed by 740 levels on the weekly charts. Hence, we suggest Smart Traders to initiate Short position in the stock around 655 levels with a stop loss placed above 697 levels for a downside target of 598 levels.


TYPE: BUY CALL IN BANKINDIA

FIRST LEG Buy BANKINDIA MAY 100 CE @ 1.25

BEP 101.25

MAX PROFIT Unlimited

MAX LOSS 7500

STOP LOSS 0.25 (option levels)

RATIONALE The stock has gained around 20% last week with an unfilled gap up. The stock has reversed its last 4 weeks of down move with huge volumes. Its derivative activity suggests long built up in the counter. Hence, bullish view for near term.

WEEKLY VIEW OF THE MARKET

NIFTY (11844.10): Indian equity benchmark index Nifty 50 closed at a record high after a stellar rally witnessed in view of the exit polls and election results favoring NDA. During the week,

the index rose by 3.83% amid huge volatility witnessing buying on every dip. In the current scenario, Nifty may trade with a bullish bias unless and until 11590 levels are taken off from upside

and sustained. For the week ahead to watch, the index may retain its volatility in view of the May Series Derivatives expiry and also due to RBI Monetary and Credit Information Review on

May 31st. Market participants may also stay cautious ahead of the key GDP Quarterly (YoY) (Q4), Infrastructure Output (YoY) (Apr) and Federal Fiscal Deficit (Apr) releasing on the same

day post-market hours. On the derivatives front, Open Interest data suggests that the index may likely to trade in the range of 11500 to 12500 levels while 11700 and 12000 levels may act

as minor support and resistance respectively.

DERIVATIVE STRATEGIES

DERIVATIVES

TYPE: BUY CALL IN NIFTY

FIRST LEG Buy NIFTY 30 MAY 11850 CE @ 90


BEP 11940

MAX LOSS 6750

RATIONALE Nifty has clocked and closed at all time highs. The index has gapped up on Monday and is still trading above the gap. The index has gained around 4.00% for the week. For now, supports may be assumed at the recent swing lows of 11600-11550 zone and key resistances at all time highs zone of 12050-12100 levels.

TYPE: CALL RATIO IN LT

FIRST LEG Buy 1 Lot of LT MAY 1500 CE @ 40

Second Leg Sell 2 Lots of LT May 1600 CE @ 4

BEP Lower BEP 1532, and Upper BEP 1662

MAX PROFIT 25500

MAX LOSS 12000 Below LBEP and Unlimited Beyond UBEP

RATIONALEThe stock has clocked and closed at all time highs. The stock has also given breakout from multi month trading range. The volumes on the up move are very huge indicating strong hands may have accumulated. It is one of the stocks which has moved much higher and outperformed its broader index and sectoral index. Hence, bullish view for near term.

TYPE: BUY CALL IN BANKNIFTY

FIRST LEG Buy BANKNIFTY 30 MAY 31300 CE @ 220


BEP 31520

MAX LOSS 4400

RATIONALEBANKNIFTY has clocked and closed at all time highs. The index gapped up on Monday and is still trading above the gap. The index has gained around 6.00% for the week. On the last day of the week also, the index has gained more than 2.50%. For now, supports may be assumed at the recent swing lows of 30500-30600 zone and key resistances at all time highs zone of 31700-31800 and beyond it at 32200-32300 levels.

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7KSTREET - 25TH MAY 2019

DERIVATIVES

FII ACTIVITY IN INDEX FUTURES FII ACTIVITY IN STOCK FUTURES

TOP 6 LONG BUILD UP

Stock Name LTP % Price Change Open Int % OI Change

BALKRISIND 798.2 0.42 2597600 56.03

HDFCBANK 2373.35 0.48 16350250 46.11

MANAPPURAM 138.2 12.72 11274000 44.10

ENGINERSIN 120 10.91 9744500 42.60

ACC 1704.9 6.12 2794000 40.86

CHOLAFIN 1484.8 9.92 765500 38.43

BANKNIFTY OPTION OI CONCENTRATION CHANGE IN BANKNIFTY OPTION OI

TOP 6 SHORT CLOSURE


ADANIENT 156.4 31.10 31708000 -25.92

CGPOWER 39.2 10.11 19608000 -23.21

INFIBEAM 46.1 8.09 10496000 -22.57

KSCL 487.35 7.65 736500 -21.44

UJJIVAN 347.25 12.36 2817600 -18.59

BHARATFIN 1033.25 21.47 6386000 -17.30

TOP 6 SHORT BUILD UP


HINDZINC 252.80 -0.26 5126400 35.30

BATAINDIA 1339.75 -2.55 2156000 33.70

WIPRO 282.90 -1.22 43600000 25.80

SUNTV 530.55 -0.66 7249000 24.62

TATAELXSI 862.50 -0.27 2011000 20.53

ITC 290.45 -3.63 93746400 15.95

TOP 6 LONG CLOSURE


EICHERMOT 20850.65 -0.41 405625 -7.74

TORNTPHARM 1528.45 -7.25 681000 -7.09

TATACOMM 550.05 -0.54 2252000 -7.06

PVR 1708.40 -4.91 742400 -3.18

MINDTREE 980.05 -0.18 1927200 -2.81

DRREDDY 2663.90 -2.95 3848750 -1.52

NIFTY OPTION OI CONCENTRATION CHANGE IN NIFTY OPTION OI

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COMMODITIES

BASE METALSMetals traded on a weaker note during the initial part of the week and towards the end, prices recovered from the losses made. Varying concerns about trade war between US and China made the prices to trade on a lower note and appreciation in Indian rupee in observance of election result outcome made the prices to trade low. Speaking on fundamentals, as per China customs data, an import of 126,000 tons of Aluminium scrap was observed during March which was down 51,000 tons or 28.83% from a year ago. This brought imports in January-March to 184,000 tons down 40.16% from the same period during 2018. Imports via general trade in March dropped 42.56% from a year earlier to 73,900 tons while imports via processing trade rose 7.09% year on year to 51,900 tons. Downstream demand for nickel remains weak now and it is heard that steel plants in Guangdong will significantly cut output of stainless steel. Global aluminium production for April was down from 5414 KT of March to 5203 KT giving support to the fall witnessed in Monday’s session. Chinese output was down from 3073 KT to 2940 KT for April. The global world refined copper market showed a 74,000 tonnes surplus in February compared to a 33,000 tonnes deficit in January. Production in Chile, the world’s biggest copper mine producing country declined by 6% mainly due to lower copper head grades. Indonesian concentrate production declined by 50% primarily as a consequence of the transition of the country’s major two mines to different ore zones leading to temporarily reduced output levels. The global zinc market was in a glut of 96,400 tons in January to March 2019 WBMS data shows, with global refined production down 4.7% and consumption down 4.8% on the year. The Bureau data also find Chinese apparent demand stood at 1.41 million tons accounting for over 45% of world’s total. Global tin demand during January to March 2019 was 91.6 kt which was 1.9% below the comparable period of 2018. Japanese consumption was 7.1 kt which was 12.2% below the comparable total for January to March 2018.

BULLIONGlobal bullion market was under pressure for most part of the week ended on 24th May 2019 wherein the investors were on selling spree. Positive trend in the global equity as well as stronger dollar against major currencies kept the bullion market under pressure. Market participants took cautious approach during mid of the week ahead of release of US Federal Reserve’s meeting minutes on Wednesday. In its meeting minutes, US central bank members vowed for being patient on interest rate. Many of the members sided that Chairman Jerome Powell’s view that the recent dip in inflation was temporary. US existing home sales came at 5.19 million lower than market expectation of 5.35 million and previous number of 5.21 million. However, the market witnessed sharp recovery on Thursday following lower than expected PMI data. US flash manufacturing and services PMI contracts to 50.6 and 50.9 from previous number of 52.6 and 53.0 respectively. On domestic front, MCX gold futures witnessed volatile trend during the week. At the beginning of the week, MCX gold futures were on downtrend reacting to sharp appreciation of Indian Rupee against US Dollar after exit poll results which had indicated thumping victory to ruling NDA government in the recently concluded general election. During rest of the week, market was in range bound and only on Thursday it staged a strong rally moving in sync with international market. The CME gold futures are heading to end the week on a positive note while MCX gold is heading to end the week in red.

CRUDE OILGlobal crude oil prices crashed on Thursday after demand side fundamentals pulled out support from the prices as US-Sino trade war created a situation of economic slowdown. The prices tail winded by 5.71% at NYMEX whereas at MCX futures, the prices went down by 5.61% on daily basis. On Friday, Global crude oil markets stabilized amid OPEC supply cuts and tensions in the Middle East. This week’s fall was the steepest since the start of the year on the back of a global economic slowdown and swelling fuel inventories. As per EIA, US crude oil inventories rose unexpectedly last week hitting their highest levels since July 2017 due to weak refinery output particularly in the Midwest. This week’s decline was previously hinted in advance by CFTC data as hedge funds continued to liquidate some of their bullish position in oil last week. The market has been on concerns since this entire week about the economy and the outlook for consumption which outweighed escalating tensions and the threat to supplies in the Middle East. Last week, Saudi Energy Minister Khalid al-Falih said that there was consensus among OPEC and allied oil producers to drive down crude inventories “gently” but his country would remain responsive to the needs of what he called a fragile market. Saudi Arabia’s Oil Minister said that “Our preference is to maintain production management to keep inventories on their way declining gradually, softly but certainly towards normal levels”. Saudi Arabia is in no rush to increase oil production and exports, fearing that additional supply would risk a renewed build up of stockpiles and push prices lower. Meanwhile, Turkey has closed its ports to Iranian oil, fully complying with US sanctions against its main supplier despite country publicly criticizing the US’ move to end import waivers and warning of a struggle to tap alternative producers. As per Customs data, China’s diesel exports in April surged 43% from a year earlier while kerosene shipments also rallied as new oil refineries came on stream amid a build-up of domestic supply. Separately, diesel exports rose to 2.6 million tonnes from 1.82 million tonnes in the same month last year though the April number fell from 2.71 million tonnes in March.

COTTONICE cotton futures edged higher for most part of the week ending on 24th May tracking cues from positive weekly export sales reports released by USDA on Thursday. Moreover, announcement of financial package by US government to the farmers those have been affected with trade war also added positivity to prices. Meanwhile, USDA’s weekly export sales report for the week ending 16th May showed net sales of 381,400 RB were up by 68% from the previous week and 80% from the prior 4-week average. Increases were reported for India (98,500 RB), Turkey (93,200 RB), Bangladesh (57,600 RB) and Vietnam (50,900 RB,). Reductions were for China (25,100 RB). For 2019/2020, net sales of 241,500 RB were primarily for Vietnam (79,000 RB), El Salvador (65,800 RB), Honduras (21,100 RB), China (19,800 RB) and India (15,800 RB). Exports of 348,600 RB were down 4% from the previous week but up 3% from the prior 4-week average. Exports were primarily to Vietnam (79,800 RB), Pakistan (53,300 RB), Turkey (46,300 RB), China (42,200 RB) and India (30,600 RB). Last week, USDA’s weekly crop progress report showed that cotton planting in US is lagging behind with last year acreage as well as five year average area. According to USDA’s weekly crop progress report, cotton has been planted in 44% of the area till 19th May which is down at 50% compared to same period a year ago and lower from 45% five year average. Similarly, MCX Cotton futures moved up following firm cues from global market. Tighter supply situation at physical market and forecast of delayed monsoon rainfall for year 2019 prompted speculators to cover their short positions at futures platform. Cotton Association of India trimmed its production estimates by another 6 lakh bale and came up with new production number of 315 lakh bales for India during year 2018-19..

RUBBERRubber futures prices traded on downside during the week ended on 24th May 2019 tracking sharp fall in shanghai futures. Major reason for the prices fall was pile up in rubber inventories at SHFE monitored warehouses which hit highest levels in the month. However, the rubber market is getting support from the fact of seizure of rubber tapping in China’s Yunnan province which was hit by severe heat waves. Thailand will cut rubber exports by 126,240 tonnes starting from next month for four months after a delay in implementing a supply cut agreement with other regional producers. According to ANRPC, winter season, low price for few of the farmers and possibly outbreak of leaf-fall disease are main reasons for drop in the production. In the month of April, China had imported 180,000 tonnes of rubber which was higher by 14% YoY. However, year to date till April, imports fell by 9.1% YoY to 650,000 tonnes. Japanese manufacturing PMI contracted to 49.6 from previous reading of 50.2 and market expectation of 50.5. In its Natural Rubber Trends and Statistics report, ANRPC had reported drop in the world natural rubber production by 5.2% YoY at 2.989 million tonnes. It also reported that world rubber production fell marginally by 0.4% to 3.380 million tonnes.

SOYBEAN Soybean futures witnessed larger volatility during the week tracking fundamentals of the market. Reports of larger harvest in southern America and weakening of meal prices sparked selling activities during first part of the week as prices dropped remarkably due to surging selling pressure. Strengthening of India rupee against the US dollar index weighed on the soybean prices during first half of the week However, prices witnessed good recovery during second part due to bargain buying. Moreover, forecast of delayed arrival of monsoon rainfall during year 2019 also helped prices to trade on positive bias. The Solvent Extractors’ Association of India has compiled the Import data of Vegetable Oils (edible & non-edible) for the month of April 2019. Import of vegetable oils during April 2019 decreased by 11% to 1,232,283 tons compared to 1,386,466 tons in April 2018 consisting 1,198,763 tons of edible oils and 33,520 tons of non-edible oils. The overall import of vegetable oils during November 2018 to April 2019 is reported at 7,541,689 tons compared to 7,318,295 tons during the same period of last year i.e. up by 3%. India imported about 2.48 lakh tonnes of soybean oil during April 2019 compared to 2.92 lakh tonnes of prior month. Similarly, RM seeds futures rose on improved buying from millers. Picking up of government procurement also helped prices to trade higher during the week. During Nov’18-Apr’19, import of refined oil (RBD Palmolein) increased to 1,199,052 tons from 980,353 tons in same period of last year. However, import of crude oil decreased and reported at 6,004,778 tons from 6,166,398 tons during the same period of last year.


ZINC

COMMODITIES

TRENDSHEET

Commodities 17-May 24-May % Change 52 Week High% Change from 52 Week High

52 Week Low% Change from

52 Week Low% Change from

52 Week Low

MCX Gold (Rs/10 gms) 31791.0 31530.0 -0.8% 34031.00 -7.35% 29268.00 7.73% 9%

MCX Silver (Rs/Kg) 36577.0 36384.0 -0.5% 41698.00 -12.74% 34981.00 4.01% 3%

MCX Crude Oil (Rs/bbl) 4416.0 4071.0 -7.8% 5669.00 -28.19% 2993.00 36.02% 62%

MCX Natural Gas (Rs/mmBtu) 186.1 180.3 -3.1% 358.70 -49.74% 170.70 5.62% 24%

MCX Copper (Rs/kg) 428.3 415.5 -3.0% 493.25 -15.77% 397.40 4.54% 5%

MCX Lead (Rs/kg) 128.0 126.4 -1.3% 171.80 -26.43% 124.10 1.85% 8%

MCX Zinc (Rs/kg) 215.4 214.0 -0.7% 233.65 -8.43% 163.80 30.62% 6%

MCX Nickel (Rs/kg) 845.5 862.8 2.0% 1063.50 -18.87% 735.00 17.39% 34%

MCX Aluminium (Rs/kg) 149.4 145.7 -2.5% 167.80 -13.20% 124.75 16.75% 15%

NCDEX Soybean (Rs/Quintal) 3714.0 3736.0 0.6% 3915.00 -4.57% 3149.00 18.64% 18%

NCDEX Refined Soy Oil (Rs/10 kg) 761.4 744.5 -2.2% 784.00 -5.04% 713.60 4.32% 13%

NCDEX RM Seed (Rs/Quintal) 3886.0 3937.0 1.3% 4244.00 -7.23% 3711.00 6.09% 12%

MCX CPO (Rs/10 kg) 526.4 507.6 -3.6% 671.60 -24.42% 483.40 5.01% 15%

NCDEX Castor Seed (Rs/Quintal) 5688.0 5802.0 2.0% 6300.00 -7.90% 3831.00 51.45% 21%

NCDEX Turmeric (Rs/Quintal) 6992.0 7062.0 1.0% 7464.00 -5.39% 5958.00 18.53% 3%

NCDEX Jeera (Rs/Quintal) 17725.0 17710.0 -0.1% 21000.00 -15.67% 15140.00 16.97% 35%

NCDEX Dhaniya (Rs/Quintal) 7451.0 7534.0 1.1% 7688.00 -2.00% 4186.00 79.98% 13%

MCX Cardamom (Rs/kg) 2321.1 2287.8 -1.4% 2495.40 -8.32% 818.50 179.51% 70%

NCDEX Wheat (Rs/Quintal) 1975.0 1950.0 -1.3% 2162.00 -9.81% 1752.00 11.30% 29%

NCDEX Guar Seed (Rs/Quintal) 4359.0 4419.0 1.4% 4869.50 -9.25% 3494.50 26.46% 25%

NCDEX Guar Gum (Rs/Quintal) 8722.0 8856.0 1.5% 10510.00 -15.74% 7200.00 23.00% 30%

MCX Cotton (Rs/Bale) 21270.0 21540.0 1.3% 24280.00 -11.29% 19950.00 7.97% 26%

NCDEX Cocud (Rs/Quintal) 2703.0 2772.5 2.6% 2772.50 0.00% 1248.00 122.16% 43%

MCX Mentha Oil (Rs/kg) 1397.4 1478.4 5.8% 1846.10 -19.92% 1106.00 33.67% 58%

TECHNICAL RECOMMENDATIONS

LEAD

COPPER

• LME Zinc 3M forward contract prices have settled lower at $2558/Mt down by 1.4% from the previous week’s closing price of $2594.

• Prices have breached and trading below the weekly 8, 13 EMA support levels ($2730, 2760) also witnessing moving averages bearish crossover.

• Prices have started rebounding after taking supports around $2500 levels which is the long term rising trend line support levels.

• The weekly RSI-14 is trading around $40.LME Zinc 3M forwards: Bearish trend is in progress however mere pullbacks are expected towards the $2730, view will be intact until $2500 is not interrupted.

Recommendations: Buy Zinc May MCX at 213-212 TP 225 SL 208

• LME Lead 3M forward contract prices have settled marginally higher at $1831/Mt from the previous week’s closing price of $1821 up by 0.6%.

• Prices are trading below the weekly 8, 13 EMA support levels ($ 1920, 2000). Also trading below the consolidation break out point of $1890.

• Lower side previous week’s low $1770 may act as a support levels. Since last two consecutive weeks, prices are witnessing a formation of bearish reversal candle stick pattern (Doji).

• The weekly momentum indicator RSI-14 is trading around 32 near the oversold zone.LME Lead 3M forward: Bearish trend is in progress however pullbacks towards the $1890 then $1920 is expected, view will be intact until $1770 is not interrupted.

Recommendations: Buy Lead May MCX at RS 125.50-125 TP 132 SL 122

• LME Copper 3M forward contract prices have settled lower at $5971.5/Mt down by 1.4% from the previous week’s closing price of $6057.

• Since last several weeks, prices are hovering below the weekly 8 and 13 EMA support levels $6270 at $6330 respectively and also witnessing a moving averages bearish crossover 13/8.

• Lower side, prices are witnessing supports at $5800 levels then at $5720 levels which are the Fibonacci 50% support levels and previous lows respectively.

• The weekly momentum indicator RSI-14 is trading around 37 near the oversold zone territory.LME Copper 3M forward: Bearish trend is in progress however mere pullback is expected due to oversold scenario (Range $5800-$6170).

Recommendations: Buy Copper June MCX at Rs 413-415 TP 430 SL 403


COMMODITIES

NYMEX CRUDE OIL CALENDAR SPREAD NYMEX NATURAL GAS CALENDAR SPREAD

MCX CRUDE OIL MCX NATURAL GAS

NEWS DIGEST

• India has stopped importing oil from Iran after US waivers granted to eight buyers expired

early this month.

• Silver prices dropped 0.33% to Rs. 36,535 per kg in futures trade Friday amid profit-

booking by participants and weak global cues. On the Multi Commodity Exchange, silver

contracts for July delivery fell by Rs. 122 or 0.33% to Rs. 36,535 per kg in a business turnover

of 985 lots. Globally, silver was trading lower by 0.50% to USD 14.54 an ounce in New York.

• Gold prices dipped by 0.24% to Rs. 31,590 per 10 gram in futures trade Friday as

speculators reduced exposure. On the Multi Commodity Exchange, gold contracts for

June delivery fell by Rs. 77 or 0.24% to Rs. 31,590 per 10 gram in a business turnover of

6,022 lots.

• NCDEX Jun Soybean closed higher on Thursday but traded in a range for this week to

close at Rs. 3,721 per 100 kg. This year soybean area may be higher as prices are higher

than MSP of Rs. 3399 per 100 kg. We have seen downtrend in prices last week due to lower

demand for crushing on expectation of improving edible oil imports. As per latest SOPA

press release, soybean arrivals for the Oct-Apr period pegged at 81 lt, up by 21.8% on year.

• Investing in commodities comes with its share of risks. Without an active options market,

exposure to the futures market can be a dicey proposition. Analysts said off-loading

of positions by participants to book profits influenced gold prices at the futures trade.

Moreover, a strong rupee against the US dollar further dented the price of the precious

metal in domestic markets.

WEEKLY COMMENTARY

• The crude oil prices ended the week on a weaker note as the fall that was triggered because of a larger than expected inventory intensified after the US imposed 25% tariff on $200 billion worth of Chinese goods. The US President went on to say that he would sharply hike tariffs on Chinese goods leading to reciprocal action by the Chinese government and potentially derailing months of trade negotiations between the world’s two largest economies, which would lead to stoking concerns over global growth.

• Silver is consolidating the biggest one-day gain in almost two months made last Friday and is sitting just below the 200-day moving average at 14.9366. Speculative investors turned net buyers for the first time in three weeks according to CFTC data as at April 30. Bloomberg notes that Exchange-Traded Funds (ETFs) increased holdings of silver by the most since February 14 last Friday.

• Copper prices remain surprisingly resilient considering the negative sentiment surrounding the US-China trade negotiations this week. Prices touched the lowest since January 30 yesterday in a knee-jerk reaction to the Trump tariff threat but rebounded strongly to close in the black. The rebound ensured that prices remained above the 200-day moving average at 2.7599 on a closing basis. That moving average has supported prices since February 15.

• Natural Gas prices remain subdued hovering just above 2-1/2 year lows amid slackening demand with cooler weather across the US expected for the next week reducing demand for gas for air-conditioning. Optimistic bulls may find some comfort in the fact that gas stockpiles are below normal levels for this time of the year, though weekly EIA data has been showing that stockpiles have been building up over the past five weeks with last week’s increase the most since June 2015.

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Volume Open Interest Price (INR/Bbl)


COMMODITIES

PRICES OF METALS IN LME/ COMEX/ NYMEX (IN US $)

Commodity Exchange Contract 17-May 24-May % change

Aluminium LME 3M 1831.50 1802.00 -1.61%

Copper LME 3M 6057.00 5962.50 -1.56%

Lead LME 3M 1820.50 1830.00 0.52%

Nickel LME 3M 12000.00 12380.00 3.17%

Zinc LME 3M 2594.00 2555.00 -1.50%

Gold CME June 1277.40 1284.30 0.54%

Silver CME July 14.36 14.53 1.15%

WTI Crude oil CME June 62.71 59.02 -5.88%

Natural Gas CME May 2.62 2.60 -0.95%

INTERNATIONAL COMMODITY PRICES

Commodity Exchange Contract 17-May 24-May % change

Soybean CBOT July 833.75 843.00 1.11%

Soy oil CBOT July 27.18 27.01 -0.63%

CPO BMD June 2096.00 2014.00 -3.91%

Cotton ICE July 65.86 68.31 3.72%

FUTURE PRICES (% CHANGE)

LME WAREHOUSE STOCKS (IN TONS)

Commodity Previous week This week Change % Change

Copper 188725 185825 -2900 -1.54%

Zinc 104850 102600 -2250 -2.15%

Aluminium 1231200 1208900 -22300 -1.81%

Lead 73300 72475 -825 -1.13%

Nickel 164100 164058 -42 -0.03%

SHANGHAI WAREHOUSE STOCKS (IN TONS)*


Copper 187963 172266 -15697 -8.35%

Zinc 68808 56320 -12488 -18.15%

Aluminium 569131 539202 -29929 -5.26%

*Until Wednesday, (Chinese market was closed last week)

GLOBAL STOCK POSITION (IN TONS)

COMEX WAREHOUSE STOCKS (IN TONS)


Copper 32174 31825 -349 -1.08%

Crude oil prices

-7.81%

-3.57%

-3.12%

-2.99%

-2.51%

-2.23%

-1.43%

-1.27%

-1.25%

-0.82%

-0.76%

-0.65%

-0.53%

-0.08%

0.59%

1.00%

1.11%

1.27%

1.31%

1.38%

1.54%

2.00%

2.05%

2.57%

5.80%

-10.00% -8.00% -6.00% -4.00% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00%

Crude Oil

CPO

Natural Gas

Copper

Aluminum

Soy Oil

Cardamom

Wheat

Lead

Gold

Barley

Zinc

Silver

Jeera

Soybean

Turmeric

Dhaniya

Cotton

RM Seed

Guar Seed

Guar Gum

Castor Seed

Nickel

Cotton Seed Oil Cake

Mentha OilCrude oil prices have been on revolt since the beginning of this year and awaited OPEC’s production cut agreement to reflect its upshot. The crude oil markets are currently expecting slowdown in global demand owning to slower economic development due to increasing trade tensions between US & China and geopolitical tiff with Iran. China is one of the largest energy consumer and thus holds great importance in demand support to the prices. Although the major supplier OPEC believes that in 2019, demand for its crude will average around 30.58 million barrels per day (bpd), up by 280,000 from the previous forecast. In contrary, IEA revised and cut down the global demand outlook for this year by 90,000 bpd averaging it to total of 1.3 million bpd. The major reasons for the slowdown are due to divergence in consumption patterns in OECD (Organization for Economic Cooperation and Development) countries and Non-OECD countries. Demand in Non-OECD countries like –China, India and Russia actually surged by 930,000 bpd on year-on-year basis. Separately, demand in OECD countries fell by 3, 00,000 bpd mostly in EU members’ countries excluding US where the consumption grew.

On the supply fundamentals, global supply side has shrunk by 300,000 bpd led by Iran, Azerbaijan, Kazakhstan and Canada. After the effective US sanctions on Iran, crude output in country dropped by 130,000 bpd making it a total of 2.61 million bpd in April. The following expiration of sanction waivers has created a supply gap for other OPEC members to fill. OPEC members held a 14th JMMC meeting on 19 May and observed adherence to the production cut quotas. The compliance level among OPEC members in April stood at 168% which was 120% since January 2019. The next 15th JMMC meeting is scheduled in June when the market will be waiting the decision regarding the extension of production cut accord. Mostly the market is factoring in and building expectations that OPEC will continue with supply cuts till the end of year to bring the global markets into balance which would be only possible if the decided production cuts extend till the end of 2019.


USD/INR

USDINR is currently trading at 69.37. During the week, it made a high of 70.06 and low of 69.35. The RSI is at 43.380. Moving average of 32 is at 70.57 and 55 is at 69.53. The trend is looking positive for the week. Hence, recommend buying at 69.80-69.70 TP 70.70 SL 69.20

EUR/INR

EURINR is currently trading at 77.68. During the week, it made a high of 78 and low of 77.44. The RSI is trading at 39.98. Moving average of 32 is at 79.95 and 55 is at 49.48. The trend is looking negative for the week. Hence, recommend selling at 78.70-78.80 TP 77.30 SL 79.30.

GBP/INR

GBPINR is currently trading at 88.18. During the week, it made a high of 89.61 and low of 87.71. The RSI is trading at 42.87. Moving average of 32 is at 91.27 and 55 is at 90.73. The trend is looking negative for the week. Hence, recommend selling at 90.30-90.40 TP 88.50 SL 90.90.

JPY/INR

JPYINR is currently trading at 63.45. During the week, it made a high of 63.87 and low of 62.85. The RSI is at 55.50. Moving average of 32 is at 63.53 and 55 is at 62.69. The trend is looking positive for the week. Hence, recommend buying at 63.80-63.90 TP 65.00 SL 63.30.

TECHNICAL RECOMMENDATIONMARKET STANCE

USD/INR hit the high of 70.06 and a low of 69.35 for the week and ended at 69.37. Rupee tested its biggest gain in two months after exit poll results. The Election Commission is likely to meet on May 25 to finalise the list of winning candidates to be handed over to the President. Sensex touched a record high of 40,124 closed the week with gains of over 1,500 points while Nifty 50 hit a record high of 12,041 closed with gains of 437 points in the same period. The week gone by saw massive volatility in India VIX registering record highs but normalized at the end of the week. Rupee was relatively stable as compared to Indian equities and saw a movement of about 70 paise for the whole week.

NEWS FLOWS OF LAST WEEK

• The risk that May will be replaced by someone who is willing to leave in a more disruptive way than May has made sterling vulnerable. UK PM May said that she would resign on June 7.

• Fed’s Powell is not providing any clear hints of a rate cut this year, the rebound in yields could continue for a while.

• It was a historic week for Indian markets as both Sensex and Nifty hit fresh record highs and investors’ wealth rose by over Rs. 6 lakh crore for the week ended May 24.

• Rupee was relatively stable as compared to Indian equities and saw a movement of about 70 paise for the whole week.

• In broad terms, the UK economy has performed better than many feared given the uncertainty for businesses and investors.

• Trump approved sending more forces to the Middle East amid tensions with Iran.

• Oil prices rose more than 1% on Friday ahead of long US and UK holiday weekends but posted the biggest weekly drop of the year pressured by rising inventories and worries about the global economy.

CURRENCY

CURRENCY TABLE

Currency Pair Open High Low Close

USDINR 69.38 70.06 69.35 69.37

EURINR 77.54 78.00 77.44 77.68

GBPINR 89.38 89.61 87.71 88.18

JPYINR 0.6381 0.6387 0.6285 0.6345


ECONOMIC GAUGE FOR THE NEXT WEEK

GMT Start Date Local Time Country Relevance Indicator Name Reuters Poll Unit Prior

27-May 07:00:00 China (Mainland) Not Rated Industrial profit YTD Percent -3.3

27-May 07:00:00 China (Mainland) Not Rated Industrial profit YY Percent 13.9

27-May 17:30:00 United Kingdom Not Rated Steel Production 735

28-May 13:30:00 Euro Zone Medium Money-M3 Annual Growth 4.4 Percent 4.5

28-May 13:30:00 Euro Zone Low Loans to Households Percent 3.2

28-May 13:30:00 Euro Zone Low Loans to Non-Fin Percent 3.5

28-May 13:30:00 Euro Zone Not Rated Broad Money EUR 12507450

28-May 14:00:00 United Kingdom Low UK Finance Mortgage Apps No. of 39.98

28-May 14:30:00 Euro Zone Medium Business Climate 0.4 0.42

28-May 14:30:00 Euro Zone Medium Economic Sentiment 104 Index 104

28-May 14:30:00 Euro Zone Medium Industrial Sentiment -4.3 Balance -4.1

28-May 14:30:00 Euro Zone Medium Services Sentiment 11 Balance 11.5

28-May 14:30:00 Euro Zone High Consumer Confid. Final -6.5 Balance -6.5

28-May 14:30:00 Euro Zone Low Cons Infl Expec Balance 15.7

28-May 14:30:00 Euro Zone Low Selling Price Expec Balance 5.2

28-May 18:30:00 United States Low Monthly Home Price MM Percent 0.3

28-May 18:30:00 United States Low Monthly Home Price YY Percent 4.9

28-May 18:30:00 United States Low Monthly Home Price Index Index 272.8

28-May 18:30:00 United States Medium CaseShiller 20 MM SA 0.2 Percent 0.2

28-May 18:30:00 United States Low CaseShiller 20 MM NSA Percent 0.2

28-May 18:30:00 United States Medium CaseShiller 20 YY 2.8 Percent 3

28-May 19:30:00 United States High Consumer Confidence 130 Index 129.2

28-May 20:00:00 United States Low Dallas Fed Mfg Bus Idx Index 2

28-May 20:30:00 United States Not Rated Export Wheat Inspected Tonne 757.704

28-May 20:30:00 United States Not Rated Export Corn Inspected Tonne 820.916

28-May 20:30:00 United States Not Rated Exp Soybean Inspected Tonne 497.07

29-May 16:30:00 United States Low MBA Mortgage Applications Percent 2.4

29-May 16:30:00 United States Low Mortgage Market Index Index 425.6

29-May 16:30:00 United States Low MBA Purchase Index Index 263

29-May 16:30:00 United States Low Mortgage Refinance Index Index 1334.9

29-May 16:30:00 United States Low MBA 30-Yr Mortgage Rate Percent 4.33

29-May 18:25:00 United States Low Redbook MM Percent 1.2

29-May 18:25:00 United States Low Redbook YY Percent 5.2

29-May 19:30:00 United States Low Rich Fed Comp. Index Index 3

29-May 19:30:00 United States Low Rich Fed, Services Index Index 26

29-May 19:30:00 United States Low Rich Fed Mfg Shipments Index -2

29-May 20:00:00 United States Low Texas Serv Sect Outlook Index 5.7

29-May 20:00:00 United States Low Dallas Fed Services Revenues Index 13.9

29-May 05:20:00 Japan Low Foreign Bond Investment JPY 1355.7

29-May 05:20:00 Japan Low Foreign Invest JP Stock JPY -58

30-May 18:00:00 United States Low Corporate Profits Prelim Percent 0

30-May 18:00:00 United States High GDP 2nd Estimate 3.1 Percent 3.2

30-May 18:00:00 United States Low GDP Sales Prelim Percent 2.5

30-May 18:00:00 United States Low GDP Cons Spending Prelim Percent 1.2

30-May 18:00:00 United States Medium GDP Deflator Prelim Percent 0.6

30-May 18:00:00 United States Medium Core PCE Prices Prelim 1.3 Percent 1.3

CURRENCY


30-May 18:00:00 United States Low PCE Prices Prelim Percent 0.6

30-May 18:00:00 United States Low Adv Goods Trade Balance USD -71.33

30-May 18:00:00 United States Low Wholesale Inventories Adv Percent -0.1

30-May 18:00:00 United States Low Retail Inventories Ex-Auto Adv Percent 0

30-May 18:00:00 United States High Initial Jobless Claims 215 Person 211

30-May 18:00:00 United States Low Jobless Claims 4-Wk Avg Person 220.25

30-May 18:00:00 United States Medium Continued Jobless Claims Person 1.676

30-May 19:30:00 United States Low Pending Homes Index Index 105.8

30-May 19:30:00 United States Medium Pending Sales Change MM 0.5 Percent 3.8

30-May 20:00:00 United States Not Rated EIA- Nat Gas, Change Bcf Cft 100

30-May 20:00:00 United States Not Rated Nat Gas-EIA Implied Flow Cft 100

30-May 20:30:00 United States Not Rated EIA Weekly Crude Stocks Barrel 4.74

30-May 20:30:00 United States Not Rated EIA Weekly Dist. Stocks Barrel 0.768

30-May 20:30:00 United States Not Rated EIA Weekly Gasoline Stk Barrel 3.716

30-May 20:30:00 United States Not Rated EIA Weekly Crude Imports Barrel -0.244

30-May 20:30:00 United States Not Rated EIA Weekly Rfg Stocks Barrel -0.009

30-May 20:30:00 United States Not Rated EIA Weekly Heatoil Stock Barrel -0.028

30-May 20:30:00 United States Not Rated EIA Weekly Prods Imports Brl/Day 0.6

30-May 20:30:00 United States Not Rated EIA Weekly Dist Output Brl/Day -0.058

30-May 20:30:00 United States Not Rated EIA Weekly Crude Runs Brl/Day -0.098

30-May 20:30:00 United States Not Rated EIA Weekly Refining Util Percent -0.6

30-May 20:30:00 United States Not Rated EIA Wkly Crude Cushing Barrel 1.266

30-May 20:30:00 United States Not Rated EIA Weekly Gasoline O/P Brl/Day -0.029

30-May 23:00:00 United States Not Rated EIA Ethanol Ref Stk Barrel 23404

30-May 23:00:00 United States Not Rated EIA Ethanol Fuel Total Brl/Day 1071

30-May 04:31:00 United Kingdom Medium GfK Consumer Confidence -12 Balance -13

30-May 05:00:00 Japan High CPI Tokyo Ex fresh food YY 1.2 Percent 1.3

30-May 05:00:00 Japan High CPI, Overall Tokyo Percent 1.4

30-May 05:00:00 Japan Not Rated CPI Tokyo Excl Food & Energy Y/Y Percent 0.9

30-May 05:00:00 Japan Not Rated CPI Tokyo Excl Food & Energy M/M Percent 0.4

30-May 05:00:00 Japan High Jobs/Applicants Ratio 1.63 Times 1.63

30-May 05:00:00 Japan High Unemployment Rate 2.4 Percent 2.5

30-May 05:20:00 Japan High Industrial Output Prelim MM SA 0.2 Percent -0.6

30-May 05:20:00 Japan Low IP Forecast 1 Mth Ahead Percent 2.7

30-May 05:20:00 Japan Low IP Forecast 2 Mth Ahead Percent 3.6

30-May 05:20:00 Japan Medium Retail Sales YY 0.8 Percent 1

31-May 06:30:00 China (Mainland) Low NBS Non-Mfg PMI Diff.Idx 54.3

31-May 07:30:00 China (Mainland) High NBS Manufacturing PMI 49.9 Diff.Idx 50.1

31-May 07:30:00 China (Mainland) Not Rated Composite PMI Diff.Idx 53.4

31-May 10:30:00 Japan Low Consumer Confid. Index Index 40.4

31-May 10:30:00 Japan Low Construction Orders YY Percent 66.1

31-May 11:30:00 United Kingdom High Nationwide house price mm 0 Percent 0.4

31-May 11:30:00 United Kingdom High Nationwide house price yy 1.2 Percent 0.9

31-May 14:00:00 United Kingdom Medium BOE Consumer Credit 0.955 GBP 0.549

31-May 14:00:00 United Kingdom Medium Mortgage Lending 3.745 GBP 4.12

31-May 14:00:00 United Kingdom Medium Mortgage Approvals 63.5 No. of 62.341

31-May 14:00:00 United Kingdom Low M4 Money Supply Percent -0.5

31-May 14:00:00 United Kingdom Not Rated Broad Money GBP 2408664

31-May 15:30:00 India Low Fed Fiscal Deficit, INR INR 8514.99

CURRENCY


24-May 17:00:00 India Low FX Reserves, USD USD 420.06

31-May 17:30:00 India High GDP Quarterly YY Percent 6.6

31-May 17:30:00 India Low Infrastructure Output YY Percent 4.7

31-May 18:00:00 United States Medium Personal Income MM 0.3 Percent 0.1

31-May 18:00:00 United States Medium Personal Consumption Real MM Percent 0.7

31-May 18:00:00 United States High Consumption, Adjusted MM 0.2 Percent 0.9

31-May 18:00:00 United States Medium Core PCE Price Index MM 0.2 Percent 0

31-May 18:00:00 United States Low Core PCE Price Index YY 1.6 Percent 1.6

31-May 18:00:00 United States Low PCE Price Index MM Percent 0.2

31-May 18:00:00 United States Low PCE Price Index YY Percent 1.5

23-May 18:00:00 United States Not Rated Corn Export Sales New Tonne 638.7

23-May 18:00:00 United States Not Rated Corn Export Sales Net Tonne 553.3

23-May 18:00:00 United States Not Rated Corn Exp Sale Next Yr Net Tonne 80.8

23-May 18:00:00 United States Not Rated Corn Exp Sales Net Total Tonne 634.1

23-May 18:00:00 United States Not Rated Soybean Export Sales New Tonne 440.6

23-May 18:00:00 United States Not Rated Soybean Export Sales Net Tonne 370.9

23-May 18:00:00 United States Not Rated Soybean Exp Sale Next Yr Net Tonne 303.4

23-May 18:00:00 United States Not Rated Soybean Exp Sale Net Total Tonne 674.3

23-May 18:00:00 United States Not Rated Soybeanmeal Exp Sale Net Tonne 196.1

23-May 18:00:00 United States Not Rated Soymeal Exp Sls Next Yr Net Tonne 69.3

23-May 18:00:00 United States Not Rated Soybn Meal Exp Sls Net Total Tonne 265.4

23-May 18:00:00 United States Not Rated Soybeanoil Exp Sales Net Tonne 10.8

23-May 18:00:00 United States Not Rated Soybn Oil Exp Sls Nxt Yr Net Tonne 0

23-May 18:00:00 United States Not Rated Soybn Oil Exp Sls Net Total Tonne 10.8

23-May 18:00:00 United States Not Rated Wheat Export Sales New Tonne 301.4

23-May 18:00:00 United States Not Rated Wheat Export Sales Net Tonne 114.4

23-May 18:00:00 United States Not Rated Wheat Exp Sale Next Yr Net Tonne 419.4

23-May 18:00:00 United States Not Rated Wheat Exp Sale Net Total Tonne 533.8

23-May 18:00:00 United States Not Rated Beef Export Sales New Tonne 18.4

23-May 18:00:00 United States Not Rated Beef Export Sales Net Tonne 16.9

23-May 18:00:00 United States Not Rated Up Cotton Exp Sales New No. of 250.9

23-May 18:00:00 United States Not Rated Up Cotton Exp Sales Net No. of 226.9

23-May 18:00:00 United States Not Rated US Pork Export Sales New Tonne 15.9

23-May 18:00:00 United States Not Rated US Pork Export Sales Net Tonne 10.5

31-May 18:30:00 Japan Medium Housing Starts YY -0.9 Percent 10

31-May 19:15:00 United States Medium Chicago PMI 53.8 Index 52.6

31-May 19:30:00 United States High U Mich Sentiment Final 102 Index 102.4

31-May 19:30:00 United States Low U Mich Conditions Final Index 112.4

31-May 19:30:00 United States Low U Mich Expectations Final Index 96

31-May 19:30:00 United States Low U Mich 1Yr Inf Final Percent 2.8

31-May 19:30:00 United States Low U Mich 5-Yr Inf Final Percent 2.6

31-May : United States Low Dallas Fed PCE Percent 1.9

CURRENCY


Documents

RULE THE MARKET - Karvy Onlinecontent.karvyonline.com/contents/kstreetissue038.pdfviews presented in this report are prepared by Karvy Stock Broking Limited and are subject to change